Femtocells create opportunities for operators

What is a femtocell? It’s a small box (around the size of a wireless router) that plugs into a user’s internet connection to boost 3G coverage.

How does it work? It’s essentially a miniature version of operators’ reception masts. However, instead of routing the call through an operator’s mast, it sends the call over the internet via the user’s broadband connection.What’s in it for the operators?Obviously, the potential for a new revenue stream will be appealing, but equally important is that femtocells could relieve the data strain from the networks. Femtocells are primarily being marketed for voice calls at present, but customers can also use them to browse the internet and for downloading.

What offerings are out there? Vodafone is currently the only major network with a consumer femtocell offering, which launched last month and is being marketed as ‘Vodafone Access Gateway’ (pictured, above). There’s various price plans; one offers the femtocell for £160 upfront, while another charges a £30 down payment with £10 per month subscription on a 10 month contract. Can it be a genuine mass-market product? They’ll have to become cheaper. European consumers generally expect reception and sceptics have rightly questioned whether consumers would spend extra money on something they think should already be a part of their deal. However, with 3G coverage still patchy in large areas of the country, there’s potential for large-scale demand if prices drop.

Can it become much cheaper?Yes. Production costs are dropping quickly, falling by as much as half over the last two years due to advancements in hardware. Only one year ago, US operator Sprint was charging $250 for its femtocell; Vodafone’s £160 offering significantly undercuts that. It may not be enough of a drop to tempt the mass market, but prices are moving in the right direction.